The Ministry of Finance issues a regulation concerning the procedures for the imposition of import duty rates on imported goods based on the memorandum of understanding between Indonesia and Palestine.

The provisions are stipulated under the Minister of Finance Regulation No. 72/PMK.04/2021 concerning Procedures for the Imposition of Import Duty Rates on Imported Goods Based on the Memorandum of Understanding between the Government of the Republic of Indonesia and the Government of the State of Palestine on Trade Facilitation for Certain Products Originating from Palestinian Territories (MoF Reg. 72/2021).

This regulation has been issued to provide legal certainty in the provision of customs services for imports of goods from the Palestinian territories to accommodate the dynamics of the Memorandum of Understanding between the Government of the Republic of Indonesia and the Government of the State of Palestine.

Formerly, the imposition of import duties on imported goods based on international treaties/agreements was stipulated under MoF Reg. 229/2017 as amended by MoF Reg. 124/2019. Based on these regulations, imported goods from member countries of international treaties/agreements were entitled to preferential rates.

As per Article 2 of MoF Reg. 72/2021, imported goods may be subject to preferential tariffs, the amount of which may differ from the statutory import duty rates (most favored nation/MFN). The preferential rates are imposed on five types of goods as follows:

i.	import of goods for use using an import customs notification in the form of an Import Declaration (Pemberitahuan Impor Barang/PIB);
ii.	import of goods for use using import customs notification in the form of import declaration from the Bonded Storage Area (Tempat Penimbunan Berikat/TPB), which upon the entry of goods to TPB, approval to use preferential tariffs has been obtained;
iii.	import of goods for use using import customs notification in the form of import declaration from the Bonded Logistics Center (Pusat Logistik Berikat/PLB), which upon the entry of goods to PLB, approval to use preferential tariffs has been obtained;
iv.	release of goods produced from the free trade zone to other places within the customs area (Tempat Lain Dalam Daerah Pabean/TLDDP) insofar as the raw materials and/or auxiliary materials originate from outside the customs area, approval to use preferential tariffs has been obtained upon entry of goods into the free trade zone, and is carried out by entrepreneurs in the free trade zone that have met the requirements as entrepreneurs allowed to use preferential tariffs;
v.	release of goods from Special Economic Zones (SEZ) (Kawasan Ekonomi Khusus/KEK) to TLDDP, which upon the entry of goods to SEZ, approval to use preferential tariffs has been obtained.

Entrepreneurs in free trade zones referred to in point (iv) above, on the other hand, must meet the following requirements.

i.	having a business license from the Free Trade Zone Management Board (Badan Pengusahaan Kawasan);
ii.	importing raw materials and/or auxiliary materials, and at the same time releasing manufactured goods to TLDDP;
iii.	owning and implementing a computer-based inventory information system (IT Inventory) that can be accessed online and in real-time by the Directorate General of Customs and Excise (DGCE), with the approval of the supervising Head of the Customs Office;
iv.	having customs access; and
v.	submitting the conversion of raw materials into manufactured goods and a blueprint for the production process with approval from the supervising Head of the Customs Office, when the goods are to be released to TLDDP.

Further, the provisions on the origin of goods consist of three criteria. First, the origin criteria. The origin criteria include goods that are wholly obtained or produced in one member country or goods that are not wholly obtained or produced in a member country.

Second, the consignment criteria. The consignment criteria include two aspects, i.e. the imported goods are sent directly from member countries that issue Certificate of Origin (Surat Keterangan Asal/SKA) Form IP into the customs area or imported goods are sent through one or more countries other than member countries.

Third, procedural provisions. The procedural provisions related to the issuance of SKA Form IP must meet several conditions. Said conditions include published in English, containing the SKA Form IP reference number, stating the criteria for the origin of the goods, filling out the SKA Form IP according to the provisions, issued no later than three days after the export date, and valid for 12 months from the date of issuance.

SKA Form IP may be submitted electronically by the SKA issuing agency to the customs office. In the event that SKA Form IP is submitted electronically, the obligation to submit the original SKA Form IP shall be exempted for importers, TPB operators/entrepreneurs, PLB operators/entrepreneurs, entrepreneurs in Free Trade Zones, or SEZ business entities/business players.

After the SKA Form IP is submitted electronically, the Customs and Excise Official at the Customs Office conducts research on the SKA Form IP for the imposition of preferential rates. Customs and Excise officials may request information from importers, TPB operators/entrepreneurs, PLB operators/entrepreneurs, entrepreneurs in free trade zones, or SEZ Business Entities/Business Players as per prevailing provisions.

The imposition of preferential tariffs on imported goods using SKA Form IP may be subject to re-examination or customs audit as per applicable regulations.

For SKA Form IP whose validity and correctness are doubtful, a request for a retroactive check is made to the SKA Issuing Agency, and the imported goods are subject to statutory MFN import duty tariffs. A request for a retroactive check refers to a request made by a customs and excise official to the SKA Issuing Agency to obtain information concerning the fulfillment of the Origin Criteria and/or the validity of the SKA Form IP.

The request for retroactive check can be made more than once if the answer is not accompanied by supporting evidence or the answer is deemed insufficiently convincing by the Customs and Excise Official. Parties involved in the retroactive check request process must maintain the confidentiality of information. Such information can only be disclosed by the agency authorized to conduct research and action related to the provisions on the origin criteria.

The use of SKA Form IP is subject to periodical monitoring and/or evaluation by the Head of the Regional Office of the DGCE or the Head of the Customs and Excise Primary Service Office. The monitoring and/or evaluation results are subsequently submitted to the director who carries out duties and functions in the field of international customs cooperation as materials for evaluating policies on the use of SKA Form IP.

In the event that the SKA Form IP is canceled by the SKA Issuing Agency, the preferential tariffs shall not be granted. The provisions under this MoF Reg. apply to imported goods of which the customs declaration documents have received a registration number and date from the Customs Office where customs obligations are fulfilled as of the effective date of this regulation. Promulgated on 24 June 2021, this regulation comes into force 30 days thereafter.

Procedures for the Imposition of Import Duty Rates on Imported Goods Based on the Memorandum of Understanding between Indonesia and Palestine